Fitch gives Open Text BB+, loan BBB-

Fitch Ratings said it gave Open Text Corp. and its subsidiaries, Open Text Holdings, Inc. and Open Text ULC, BB+ issuer default ratings. The subsidiaries and Open Text are co-borrowers on the secured revolver. Additionally, Fitch assigned BBB-/RR1 ratings to the senior secured debt and BB+/RR4 ratings on the senior unsecured debt of Open Text Corp., and BB+/RR4 rating on Open Text Holdings' senior unsecured debt. The agency also assigned BBB-/RR1 ratings to the secured term loan of Open Text Corp.

“With the planned issuance of debt, Fitch calculates leverage at the end of FY 2023 (FY ends June 30) may be well over 4x. As the combined entity generates cash and focuses on reducing debt, Fitch expects leverage to fall in the range of 3.4x to 3.8x by the end of FY 2024 and below 3.5x by the end of FY 2025. Open Text has publicly stated that it intends to reduce net leverage (as defined by Open Text) to below 3x within eight quarters of closing on the Micro Focus transaction,” the agency said in a press release.

The term loan proceeds along with added debt and cash will be used to fund the pending $6 billion acquisition of Micro Focus International plc. The acquisition is expected to close in the first quarter of calendar 2023, subject to the satisfaction of regulatory approvals and customary closing conditions.

Given the higher leverage from the added debt, Fitch said assigned a negative outlook.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.